In Surprise Reversal, Judge Says Bloomberg Can Record Earnings Calls

The judge in a controversial copyright case between Bloomberg News and watch-maker Swatch has changed his mind about whether it is legal to record corporate earnings calls.

In an order issued on Monday, U.S. District Judge Alvin Hellerstein wrote that Bloomberg was protected by fair use, a rule in copyright law that exempts certain activities from copyright infringement.

Hellerstein wrote, “the Court has preliminarily granted judgment to Defendant on the basis that if Defendant’s alleged actions constitute infringement, they are protected as fair use“.

The case had initially created a stir in August when the same judge refused to grant Bloomberg’s request to dismiss the case, saying Swatch’s “authorized audio recording is entitled to copyright protection.”

Swatch sued Bloomberg in February after the financial news giant recorded a conference call that the Swiss company hosted with a select group of analysts. Bloomberg then used the recording to produce a transcript to sell to investors.

Swatch’s lawsuit is based on a part of copyright law that protects sound recordings and, in particular, those created during live performers such as sports or opera. Ordinarily, the law will not protect material unless it is written down or “fixed” but there is an exception if the owner records the performance. This is why live sports events can be copyrighted, for instance.

Bloomberg had previously argued that the earnings call did not give rise to the minimum amount of originality necessary to obtain copyright protection. The fair use finding now means that the debate might not be necessary.

The judge’s order (embedded below) is an usual “preliminary judgment” that allows Swatch to submit a filing to show facts that might challenge his fair use decision.

The case has considerable significance for free expression and the financial markets, and for Bloomberg which makes significant money from selling the transcripts.

Joshua Paul, an attorney for Swatch, said he could not comment on the ruling or whether Swatch will challenge it.

Ty Trippet, a spokesperson for Bloomberg provided the following statement by email:

“We believe public companies have a responsibility to be transparent and to disclose financial performance information to all investors, not just a select group of analysts. We were gratified by the court’s comments today supporting that view.”